<PAGE> 1
PRELIMINARY DRAFT
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary proxy statement [ ] Confidential for use of the Commission only (as permitted by
Rule 14a-6(e)(2) ).
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
Merchants and Manufacturers Bancorporation, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specific in Its Charter)
James Mroczkowski, Merchants & Manufacturers Bancorporation, Inc, (414) 827-6713
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
<PAGE> 2
April 30, 1998
To: The Shareholders of Merchants & Manufacturers Bancorporation, Inc.
You are cordially invited to attend the Annual Meeting of Shareholders of
Merchants & Manufacturers Bancorporation, Inc. scheduled for 4:00 P.M. on
Tuesday, May 26, 1998, at Alverno College, Milwaukee, Wisconsin. The meeting
will take place in Wehr Hall, #1 on the enclosed map. Enter parking lot A at the
southwest corner of the Alverno campus from Morgan Avenue.
The matters expected to be acted upon at the meeting are described in detail in
the attached Notice of Annual Meeting and Proxy Statement.
Your Board of Directors and management look forward to greeting you and
discussing the condition of your corporation with you.
Please be sure to sign and return the enclosed proxy card whether or not you
plan to attend the meeting so that your shares will be voted. If you do attend
the meeting, you may revoke your proxy and vote in person if you prefer. The
Board of Directors joins me in hoping that you will attend.
Sincerely yours,
Michael J. Murry,
Chairman of the Board of Directors
Enclosure
3
<PAGE> 3
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1998
TO THE SHAREHOLDERS OF MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.:
The Annual Meeting of Shareholders of Merchants and Manufacturers
Bancorporation, Inc. ("Merchants"), will be held at Alverno College, 3401 South
39th Street, Milwaukee, Wisconsin, on Tuesday, May 26, 1998, at 4:00 p.m., for
the purpose of considering and voting on:
1. Fixing the number of directors at 19, and the election of six Directors
to serve until the annual meeting in the year 2001 as Class III
Directors. Management's nominees are named in the accompanying Proxy
Statement.
2. To consider and vote on a proposal to amend Article IV of Merchants'
Articles of Incorporation, as amended, to increase the number of
authorized shares of Common Stock from 1,500,000 to 3,000,000.
3. To consider and vote upon a proposal to amend Merchants' 1996 Incentive
Stock Option Plan to increase the number of Merchants' Common Stock
reserved for issuance upon the exercise of options granted from 13,500
shares (20,250 shares after 50% stock dividend) to 60,000 shares.
4. Such other business as may properly come before the meeting and all
adjournments thereof.
The Board of Directors has fixed April 15, 1998, as the record date for
determining the shareholders of Merchants and Manufacturers Bancorporation,
Inc., entitled to notice of and to vote at the meeting, and only holders of
Common Stock of Merchants and Manufacturers Bancorporation, Inc. of record at
the close of business on such date will be entitled to notice of and to vote at
such meeting and all adjournments.
THE BOARD OF DIRECTORS OF MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE SIX PERSONS NOMINATED
BY THE BOARD OF DIRECTORS AND NAMED IN THE PROXY STATEMENT, AND FOR THE ADOPTION
OF PROPOSALS 2 AND 3 AS DISCUSSED IN THE PROXY STATEMENT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED AT THE MEETING, WHETHER YOUR HOLDINGS ARE LARGE
OR SMALL. IF YOU DO ATTEND THE MEETING, OR FOR ANY OTHER REASON DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS VOTED.
Milwaukee, Wisconsin By Order of the Board of Directors of
May 1, 1998 Merchants and Manufacturers Bancorporation, Inc.
----------------------------------------------------
Michael J. Murry, Chairman of the Board of Directors
4
<PAGE> 4
MERCHANTS & MANUFACTURERS BANCORPORATION, INC.
14100 WEST NATIONAL AVENUE
NEW BERLIN, WISCONSIN 53151
PROXY STATEMENT
ANNUAL MEETING - MAY 26, 1998
VOTING OF PROXIES AND REVOCABILITY
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Merchants & Manufacturers Bancorporation, Inc.,
hereinafter called "Merchants," to be voted at the Annual Meeting of
Shareholders to be held on Tuesday, May 26, 1998, at 4:00 P.M., at Alverno
College, 3401 South 39th Street, Milwaukee, Wisconsin, and at any adjournment(s)
thereof (the "Annual Meeting").
The expense of printing and mailing proxy material, including forwarding expense
to beneficial owners of stock held in the name of another, will be borne by
Merchants. No solicitation of proxies other than by mail is contemplated, except
that officers or employees of Merchants or its subsidiaries may solicit the
return of proxies from certain shareholders by telephone. The Proxy Statement
and the accompanying Proxy are being sent to Merchants' shareholders commencing
on or about May 4, 1998.
Shares owned through participation in Merchants' Dividend Reinvestment Plan will
be included on the Proxy you receive and will be voted in accordance with your
instructions in the same manner as shares registered in your own name.
Arrangements will be made with brokerage houses, custodians, nominees, and other
fiduciaries to send proxy material to their principals.
The presence, in person or by proxy, of a majority of the shares of Common Stock
outstanding on the record date is required for a quorum, with respect to the
matters on which action is to be taken at the Annual Meeting. Abstentions will
be treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of determining
the approval of any matter submitted to the shareholders for a vote.
Shares as to which proxies have been executed will be voted as specified in the
proxies. If no specification is made, the shares will be voted "FOR" the
election of management's nominees as directors. If additional matters are
properly presented, the persons named in the proxy will have discretion to vote
in accordance with their own judgment in such matters.
Proxies may be revoked at any time prior to the exercise thereof by filing with
the Secretary of Merchants a written revocation or a duly executed proxy bearing
a later date. Shareholders who are present at the Annual Meeting may revoke
their proxy and vote in person, if they so desire.
5
<PAGE> 5
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on April 15, 1998, as the
record date (the "Record Date") for the determination of shareholders entitled
to notice of, and to vote at, the Annual Meeting. The securities of Merchants
entitled to be voted at the Annual Meeting consist of shares of its Common
Stock, $1.00 par value ("Common Stock") of which 1,360,948 shares were issued
and outstanding at the close of business on the Record Date. Only shareholders
of record at the close of business on the Record Date will be entitled to
receive notice of and to vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote on all matters. There are no
cumulative voting rights.
Unless otherwise directed, all proxies will be voted FOR the election of each of
the individuals nominated to serve as Class III director. The six nominees
receiving the largest number of affirmative votes cast at the Annual Meeting
will be elected as directors.
SHAREHOLDER PROPOSALS
Any shareholders desirous of including any proposal in Merchants' proxy
soliciting material for the next regularly scheduled annual meeting of
shareholders of Merchants must submit their proposal, in writing, at Merchants'
executive offices not later than December 26, 1998. Any such proposal must
comply with Rule 14a-8 of Regulation 14A of the proxy rules of the Securities
and Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
No person is known to Merchants to own beneficially more than 5% of the
outstanding shares entitled to vote at the Annual Meeting.
ANNUAL REPORT
The 1997 Annual Report of Merchants, which includes financial statements for the
years ended December 31, 1997, 1996 and 1995, has been mailed concurrently with
this proxy statement to shareholders as of the Record Date. The Annual Report
does not constitute a part of the proxy material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of Merchants is divided into three classes designated as
Class I, II and III, as nearly equal in size as possible, with each class of
directors serving staggered three-year terms. The term of office of directors in
Class III expires at the Annual Meeting. At the Annual Meeting, shareholders
will elect six Class III directors to serve until Merchants' 2001 annual meeting
of shareholders and until their successors are elected and qualified. All of the
nominees for Class III, directors are currently directors of Merchants. Messrs.
Bomberg, Kaminski, Winters, Cherek, Murry and Logarakis were elected at the 1995
annual meeting of shareholders of Merchants to serve until the 1998 Annual
Meeting.
6
<PAGE> 6
The six nominees have consented to serve, if elected, and at the date of this
Proxy Statement, Merchants has no reason to believe that any of the named
nominees will be unable to serve. Unless otherwise directed, the persons named
as proxies intend to vote in favor of the election of the six nominees listed
below.
The information presented below as to principal occupation and shares of Common
Stock beneficially owned as of April 15, 1998, is based in part on information
received from the respective persons and in part on the records of Merchants.
NOMINEES FOR CLASS III DIRECTORS
(TERM EXPIRING IN 2001)
NAME PRINCIPAL OCCUPATION AND DIRECTORSHIPS
James Bomberg President of Merchants from 1994
Age: 54 to present, appointed Chief Executive
Officer of Merchants in 1998, director
and president of Lincoln State Bank,
Milwaukee, Wisconsin, a subsidiary of
Merchants from 1991 to 1993; director and
president of M&M Services, New Berlin,
Wisconsin, a subsidiary of Merchants from
1994 to 1996, director of Merchants from
1994 to present.
Michael J. Murry Chairman of the Board of Directors of
Age: 52 Merchants since 1992; Chief Executive
Officer of Merchants from 1982 to 1998
and director of Merchants since 1982,
director of Lincoln State Bank since
1983, director of Franklin State Bank,
Franklin, Wisconsin, a subsidiary of
Merchants since 1992; Director of Lincoln
Community Bank, Milwaukee, Wisconsin, a
subsidiary of Merchants since 1994.
Conrad Kaminski Appointed President Merchants
Age: 63 -Milwaukee in 1998, President of
Lincoln State Bank from 1994 to 1998;
director of Lincoln State Bank from 1992
to present; President of Lincoln
Community Bank from 1997 to 1998,
appointed director of Lincoln Community
Bank in 1997, director of Merchants from
1991 to present; president of Merchants
from 1991 to 1993; executive vice
president of Merchants from 1982 to 1991.
Nicholas Logarakis President, General Automotive
Age: 57 Manufacturing Co., Inc. Franklin, WI;
director of Lincoln State Bank from
1977 to present; director of Merchants
from 1982 to present.
Keith Winters President, Keith C. Winters & Assoc.
Age: 59 Ltd. Franklin, WI; director of Franklin
State Bank from 1982 to present;
director of Merchants from 1989 to
present.
Duane Cherek Auto dealer, Cherek Lincoln-Mercury,
Age: 53 Greenfield, WI; director of Lincoln
Community Bank from 1987 to present;
director of Merchants since 1993,
director of M&M Services from 1994 to
present.
7
<PAGE> 7
CLASS I DIRECTORS (TERM EXPIRING IN 1999)
Thomas Gapinski Insurance executive, director of
Age: 63 Merchants from 1982 to 1986 and from 1992
to present, director of Lincoln State
Bank from 1977 to present.
J. Michael Bartels President Bartels Management
Age: 58 Services, Inc., Milwaukee, WI;
director of Merchants since 1995;
director of Franklin State Bank from
1982 to present.
John Krawczyk Executive Vice President and Chief
Age: 42 Operating Officer of Merchants since
1994; director of Merchants from 1993 to
present; director of Lincoln Community
Bank from 1987.
Gervase Rose President Roman Electric Co.,
Age: 61 Milwaukee WI, director of Merchants from
1992 to 1993 and from 1994 to present;
director of Franklin State Bank from
1982 to present.
Robert Donaj President of Achieve Mortgage
Age: 54 Corporation, Milwaukee, Wisconsin, a
subsidiary of Merchants from 1997 to
present; Director of Lincoln Community
Bank from 1987 to present; director of
Merchants 1993 to present.
James Sass President, Max A. Sass Funeral Home;
Age: 55 director of Lincoln Community Bank from
1987 to present; director of
Merchants from 1993 to present.
CLASS II DIRECTORS (TERM EXPIRING IN 2000)
Leonard Helminiak President, Buddy Squirrel Company;
Age: 77 Vice President, Quality Candy Company,
St. Francis, WI; director of
Merchants from 1983 to present;
retired director of Lincoln State Bank.
Dr. Thomas Kozina Retired physician; director of
Age: 67 Franklin State Bank from 1982 to
present; director of Merchants since 1986
Casimir S. Janiszewski President, Superior Die Set
Age: 45 Corporation, Oak Creek, WI; director of
Merchants from 1995 to present, director
of Franklin State Bank from 1982 to 1991,
director of Lincoln State Bank from 1991
to present
David Kaczynski President, Cardinal Fabricating
Age: 58 Corporation, Milwaukee, WI; director of
Lincoln Community Bank from 1994 to
present, director of Merchants from
1994 to present.
Longin Prazynski Retired building inspector, director
Age: 68 of Lincoln Community Bank from 1962 to
present, director of Merchants since
1993.
Jack Schwellinger Retired executive; director of
Age: 70 Lincoln State Bank from 1984 to
present; director of Merchants from
1986 to 1992 and from 1993 to present.
8
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 15, 1998, information concerning
beneficial ownership of Common Stock of Merchants for each nominee, continuing
director and executive officer.
<TABLE>
<CAPTION>
TITLE OF NAME OF BENEFICIAL AMOUNT OF BENEFICIAL PERCENT OF
CLASS OWNER OWNERSHIP CLASS
<S> <C> <C> <C>
Common J. Michael Bartels 18,070 1.33
Common James Bomberg 16,003 1.18
Common Duane Cherek 8,061 *
Common Robert Donaj 7,266 *
Common Thomas Gapinski 2,070 *
Common Leonard Helminiak 22,099 1.62
Common Casimir S. Janiszewski 5,053 *
Common David Kaczynski 2,712 *
Common Conrad Kaminski 38,356 2.82
Common Dr. Thomas Kozina 7,577 *
Common John Krawczyk 16,196 1.19
Common Nicholas Logarakis 13,755 1.01
Common James Mroczkowski(1) 6,989 *
Common Michael Murry 9,233 *
Common Longin Prazynski 3,750 *
Common Gervase Rose 3,870 *
Common James Sass 9,197 *
Common Jack Schwellinger 13,074 *
Common Keith Winters 16,191 1.19
Directors and Executive 219,522 16.13
Officers(2)
</TABLE>
* Less than 1%
(1) Vice President, Chief Financial Officer; not a director of Merchants
(2) Includes all of the above as a group (18 individuals).
Share ownership includes shares issuable within 60 days upon exercise of
incentive stock options owned by certain officers.
9
<PAGE> 9
All shares reported herein are owned with voting and investment power in those
persons whose names are provided herein or by their spouses. Some shares may be
owned in joint tenancy, by a spouse, or in the names of minor children.
BOARD COMMITTEES AND MEETING ATTENDANCE
The Board of Directors held five meetings during 1997. Each director attended
during his/her tenure 75% or more of the total number of meetings of the Board
of Directors and its committees of which they were members.
The Board of Directors of Merchants has the following committees:
THE EXECUTIVE PERSONNEL/COMPENSATION COMMITTEE meets periodically to
review the performance and compensation of certain senior officers of
Merchants and its subsidiaries, including all executive officers of
Merchants. The Executive Personnel/Compensation Committee is comprised
of Messrs. Sass, Rose, Logarakis, and Helminiak, none of whom are
employees of Merchants or its subsidiaries. The Executive
Personnel/Compensation Committee held two meetings during 1997.
Compensation for other officers and employees of Merchants and its
subsidiaries is determined by the management and directors of Merchants
and the respective subsidiary and reviewed by the
PERSONNEL/COMPENSATION COMMITTEE OF MERCHANTS. The
Personnel/Compensation Committee consists of directors of Merchants and
its subsidiary banks. Its members are Messrs. Murry, Logarakis, Sass,
Rose, Helminiak, Kaminski, Duginski, Bomberg, John Krawczyk and Ms.
Cameron. The Personnel/Compensation Committee held four meetings during
1997.
THE STOCK OPTION COMMITTEE is responsible for administering
Merchants' 1996 Incentive Stock Option Plan. None of the members of
the Stock Option Committee is eligible to participate in the Stock
Option Plan. The Stock Option Committee consists of Messrs. Sass,
Rose, Logarakis, and Helminiak. The Stock Option Committee did not
meet in 1997.
THE MARKETING/SERVICES COMMITTEE assists management in analyzing market
trends for the products of the subsidiary banks and in devising
strategies for promoting, advertising and selling the services of the
subsidiary banks. The Marketing Committee consists of directors of
Merchants and the subsidiary banks. The present members are Messrs.
Murry, Dunham, Klose, Cherek, Sass, Kaminski, and Bomberg. The
Marketing Committee met four times during 1997.
10
<PAGE> 10
THE ASSET/LIABILITY MANAGEMENT COMMITTEE monitors the interest rate
risk of the interest-earning assets of the subsidiary banks in
comparison to their interest-bearing liabilities. The Asset/Liability
Management Committee consists of directors of Merchants and its
subsidiary banks. Its members are Messrs. Murry, Winters, Janiszewski,
Dana, Bomberg, LaMacchia, Kaminski, Blonski, John Krawczyk and Ms.
Cameron. The Asset/Liability Management Committee met four times during
1997.
THE AUDIT/OPERATIONS COMMITTEE reviews budget and auditing matters,
internal control procedures and audit and regulatory reports. The
Audit/Operations Committee consists of directors of Merchants and its
subsidiary banks. Its members are Messrs. Kozina, Gapinski, Bartels,
Schwellinger, Gary Krawczyk, Cherek, Aguilar, Kaczynski, and Sister
Mary Jendras. The Audit/Operations Committee met four times during
1997.
THE COMPLIANCE COMMITTEE was formed in 1992. Its functions are to
oversee the establishment of policies and procedures and adherence to
such policies and procedures to ensure compliance by Merchants and its
subsidiaries with laws, rules and regulations applicable to banks and
bank holding companies. The Compliance Committee consists of directors
of Merchants and its subsidiary banks. Its members are Sister Mary
Jendras and Messrs. Kozina, Bartels, John Krawczyk, Prazynski, Donaj,
Murry, and Bomberg. The Compliance Committee met two times during 1997.
The Board of Directors does not have a standing Nominating Committee.
DIRECTOR COMPENSATION
Directors of Merchants who are not employees of Merchants or any of its
subsidiaries are paid a fee of $50 for each Board of Directors meeting and $200
for each committee meeting. Following two absences from directors or committee
meetings in any one year, the fees are only paid for actual attendance at such
meetings.
CERTAIN TRANSACTIONS
Various officers and directors of Merchants and its subsidiaries, members of
their families, and the companies or firms with which they are associated were
customers of, and had banking transactions, including loans, with one or more of
Merchants' subsidiary banks in the ordinary course of each such bank's business
during 1997. All such loans were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and, in the opinion of the management of
Merchants' subsidiary banks, did not involve more than a normal risk of
collectibility or present other unfavorable features.
Keith C. Winters and Associates, LTD, a business interest of director Winters,
lease office space from Merchants. The lease terms are substantially the same as
those offered to other tenants.
11
<PAGE> 11
Michael Duginski, director of Lincoln State Bank, and Gary Krawczyk, a director
of Franklin State Bank, are principals of the Krawczyk and Duginski, S.C. law
firm that performs legal services for Merchants and its subsidiaries. Krawczyk
and Duginski lease office space in the Merchants corporate headquarters at terms
substantially the same as those offered to other tenants.
Dana Investment Advisors, Inc., a registered investment advisor under the
Investment Advisor's Act of 1940, acts as an investment advisor to subsidiaries
of Merchants. Michael Dana, President of Dana Investment Advisors, Inc., is a
director of Lincoln State Bank. The advisory services are rendered on
substantially the same terms and conditions as those prevailing for similar
services in the relevant market.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued for services rendered in all capacities to Merchants and its affiliates
for the fiscal years ended December 31, 1997, 1996 and 1995 of the person who
was, on December 31, 1997, the Chief Executive Officer of Merchants and of
persons whose annual compensation exceeded $100,000 in 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------- -------------------------------------------------- -------------------------------------
Long-Term
Annual Compensation Compensation
Awards
- ---------------------- -------------------------------------------------- -------------------------------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options/SARs(#) Compensation
- ---------------------- -------- ---------- ---------- ------------------- -------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Murry 1997 $171,766 $80,000 $12,397 (2)
Chairman of the 1996 $204,907 $85,000 --- --- $13,527 (3)
Board of Directors 1995 $125,000 $76,204 --- --- $10,634 (4)
of Merchants(1)
- ---------------------- -------- ---------- ---------- ------------------- -------------------- ----------------
Robert Blonski 1997 $117,182 $15,000 $5,017 (5)
President and Chief 1996 $117,432 $14,335 --- --- $5,271 (6)
Executive Officer of 1995 $117,186 $13,287 --- --- $4,723 (7)
M&M Services
- ---------------------- -------- ---------- ---------- ------------------- -------------------- ----------------
Conrad Kaminski 1997 $121,217 $15,000 $5,346 (8)
President of 1996 $106,884 $14,335 --- --- $4,732 (9)
Merchants Milwaukee 1995 $101,157 $10,371 --- --- $4,327 (10)
Division
- ---------------------- -------- ---------- ---------- ------------------- -------------------- ----------------
James Bomberg 1997 $117,938 $15,000 $5,206 (11)
President and Chief 1996 $ 97,149 $14,335 --- --- $4,329 (12)
Executive Officer of 1995 $ 91,603 $11,028 --- --- $3,997 (13)
Merchants
- ---------------------- -------- ---------- ---------- ------------------- -------------------- ----------------
</TABLE>
(1) Mr. Murry also serves in various capacities as an officer of
Merchants Subsidiaries.
(2) Contributions to the Corporation's Defined Contribution 401(k) Plan
of $9,938 and life insurance policy premium of $2,459
(3) Contributions to the Corporation's Defined Contribution 401(k) Plan
of $11,080 and life insurance policy premium of $2,447.
12
<PAGE> 12
(4) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $8,241 and life insurance policy premium of $2,393.
(5) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $5,017.
(6) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $5,271.
(7) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $4,723.
(8) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $5,346.
(9) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $4,732.
(10) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $4,327.
(11) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $5,206.
(12) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $4,329.
(13) Contributions to the Corporation's Defined Contribution 401(k)
Plan of $3,997.
EMPLOYMENT AGREEMENTS
In February of 1996, Merchants entered into employment agreements with Messrs.
Murry, Bomberg, Kaminski, John Krawczyk and James Mroczkowski. At the same time,
M&M Services, Inc., a wholly-owned subsidiary of Merchants, entered into
employment agreements with Messrs. Blonski and Stengel, and Achieve Mortgage, a
wholly-owned subsidiary of Merchants, entered into an employment agreement with
Mr. Donaj (the "Employment Agreements"). Messrs. Murry, Bomberg, Kaminski,
Krawczyk and Mroczkowski serve as chairman of the board of directors, president
and chief executive officer, president Milwaukee division, executive vice
president and chief operating officer and vice president and chief financial
officer, respectively, of Merchants. Messrs. Blonski and Stengel are president
and chief executive officer and senior vice president and comptroller,
respectively, of M&M Services. Mr. Donaj serves as president and chief executive
officer, of Achieve Mortgage.
With the exception of the Employment Agreements with Messrs. Murry and
Mroczkowski, all of the Employment Agreements replace previous employment
agreements with the respective officers.
Except for the Employment Agreement with Mr. Murry, all of the Employment
Agreements have terms of three years. Mr. Murry's Employment Agreement has a
term of five years. Each Employment Agreement is automatically extended on its
anniversary date for an additional year, unless either party has given advance
notice that the Agreement will not be extended, in which case the Agreement
expires at the end of its then-remaining term.
Duties to be performed under the Agreements are set forth in the respective
By-Laws and are determined by the respective Board of Directors.
Compensation for services rendered under the Employment Agreements consists of
the Base Salary, as defined in the Agreements, and participation in bonus and
other benefit plans.
13
<PAGE> 13
If the Agreements are terminated by the employer prior to their expiration for
reasons other than the employee's death, retirement, disability, or other than
for cause as defined in the Agreements, or if the employee terminates the
Agreement for cause as defined in the Agreement or after a change in control, as
defined in the Agreements, then the employee will receive severance payments
equal to the sum of the Base Salary in effect at termination plus the cash
bonus, if any, for the year prior to termination times the number of years of
the remaining employment term. In addition, the employee will receive fringe
benefits during such remaining term.
If termination occurs because of death, retirement or for cause, or if the
employee terminates without cause, then the employer is obligated to pay the
compensation and benefits only through the date of termination.
If termination occurs due to disability, as defined in the Employment
Agreements, the employee will be entitled to payment of his Base Salary at 100%
for one year and at 75% for the remaining portion of the employment term,
adjusted by payments received by the employee pursuant to disability insurance
and social security and workers compensation programs.
The Employment Agreements provide that during the employment period and for one
year thereafter, the employee will not accept employment with any Significant
Competitor, as that term is defined in the Employment Agreements, of the
Corporation or its affiliates.
THE 1996 INCENTIVE STOCK OPTION PLAN
On April 25, 1996, the Board of Directors of Merchants adopted the Merchants and
Manufacturers Bancorporation, Inc. 1996 Incentive Stock Option Plan (the "Plan")
which was approved by the shareholders on May 28, 1996.
The Plan replaced the 1986 Incentive Stock Option Plan, which terminated in
April 1996. The purpose of the Plan is to advance the interests of Merchants and
its subsidiaries by encouraging and providing for the acquisition of an equity
interest in Merchants by key employees and by enabling Merchants and its
subsidiaries to attract and retain the services of employees upon whose skills
and efforts the success of Merchants depends.
The following summary description of the Plan is qualified in its entirety by
reference to the full text of the Plan a copy of which may be obtained from
Merchants upon request to John Krawczyk, Secretary, 14100 West National Avenue,
P.O. Box 511160, New Berlin, WI 53151.
The Plan is administered by the Stock Option Committee of the Board or by any
other committee appointed by the Board consisting of not less than three (3)
directors (the "Committee"). The Committee is comprised of directors who are
disinterested persons within the meaning of Rule 16b-3 as promulgated by the
Securities and Exchange Commission. Subject to the terms of the Plan and
applicable law, the Committee has the authority to: establish rules for the
administration of the Plan; select the individuals to whom options are granted;
determine the numbers of shares of Common Stock to be covered by such options;
and take any other action it deems necessary for the administration of the Plan.
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<PAGE> 14
Participants in the Plan consist of the individuals selected by the Committee.
Those selected individuals may include any executive officer or employee of
Merchants or its subsidiaries who, in the opinion of the Committee, contribute
to Merchants' growth and development.
Subject to adjustment for dividends or other distributions, recapitalizations,
stock splits or similar corporate transactions or events, the total number of
shares of Common Stock with respect to which options may be granted pursuant to
the Plan is 13,500. The shares of Common Stock to be delivered under the Plan
may consist of authorized but unissued stock or treasury stock.
Options may be granted by the Committee to key employees as determined by the
Committee. The Committee has complete discretion in determining the number of
options granted to each such grantee. It is intended that all options granted
under the Plan will qualify as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code.
The exercise price for all options granted pursuant to the Plan is the fair
market value of the Common Stock on the date of grant of the option; however, in
case of options granted to a person then owning more than 10% of the outstanding
Common Stock, the option price will be not less than 110% of the fair market
value on such date. The exercise price must be paid in cash at the time of
exercise of the options.
Options granted under the Plan must be exercised within ten (10) years from the
date of grant, provided that options granted to a person then owning more than
10% of the outstanding stock of Merchants must be exercised before the fifth
anniversary of the date of grant. Options not exercised within the stated time
period will expire.
The Committee may impose such transfer restrictions on the shares of Common
Stock acquired pursuant to the exercise of options under the Plan as may be
required, among others, by applicable federal or state securities laws.
Merchants has a "right of first refusal" pursuant to which any shares of Common
Stock acquired by exercising an option must first be offered to Merchants before
they may be sold to a third party. Merchants may then purchase the offered
shares on the same terms and conditions (including price) as apply to the
potential third-party purchaser.
The Board of Directors of Merchants may terminate, amend or modify the Plan at
any time, provided that no such action of the Board, without prior approval of
the shareholders may: increase the number of shares which may be issued under
the Plan; materially increase the cost of the Plan or increase benefits to
participants or change the class of individuals eligible to receive options.
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<PAGE> 15
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Plan. The grant of an option is not
expected to result in any taxable income for the recipient. The holder of an
Incentive Stock Option generally will have no taxable income upon exercising the
Incentive Stock Option (except that a liability may arise pursuant to the
alternative minimum tax), and Merchants will not be entitled to a tax deduction
when an Incentive Stock Option is excercised. The tax consequences to an
optionee upon disposition of share acquired through the exercise of an option
will depend on how long the shares have been held and upon whether such shares
were acquired by exercising an Incentive Stock Option which qualifies as such
under the Internal Revenue Code. Generally, there will be no tax consequences to
Merchants in connection with the disposition of shares acquired under an option.
The following table presents information about stock options granted in 1997 to
the officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1997
- ---------------------- --------------------- --------------------------- ------------------ -----------------
Options % of Total Options Exercise Expiration
Name Granted Granted in Fiscal Year Price Date
- ---------------------- --------------------- --------------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Michael Murry -0- -0- n/a n/a
- ---------------------- --------------------- --------------------------- ------------------ -----------------
Robert Blonski -0- -0- n/a n/a
- ---------------------- --------------------- --------------------------- ------------------ -----------------
Conrad Kaminski -0- -0- n/a n/a
- ---------------------- --------------------- --------------------------- ------------------ -----------------
James Bomberg -0- -0- n/a n/a
- ---------------------- --------------------- --------------------------- ------------------ -----------------
</TABLE>
The following table summarizes for each of the officers named in the Summary
Compensation Table the number of shares of Merchants stock acquired upon
exercise of options during the fiscal year ended December 31, 1997; the
aggregate dollar value realized upon exercise of options; the total number of
unexercised options held at the end of the fiscal year ended December 31, 1997;
and the aggregate dollar value of in-the-money unexercised options held at the
end of the fiscal year ended December 31, 1997. Value realized upon exercise is
the difference between fair market value of the underlying stock on the exercise
date and the exercise price of the option. Value of unexercised in-the-money
options at the fiscal year-end is the difference between exercise price and the
fair market value of the underlying stock on December 31, 1997, which was $46.75
per share. These values, unlike any amount which may be set forth in the column
headed "Value Realized" have not been, and may never be, realized. The
underlying options have not been, and may never be, exercised; the actual gains,
if any, on exercise will depend on the value of Merchants' stock on the date of
exercise. As of December 31, 1997, all unexercised options were exercisable.
16
<PAGE> 16
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END OPTION VALUES
- ------------------------ ------------------ -------------- ------------------------ ----------------------
Number of Value of Unexercised
Shares Acquired Value Unexercised Options In-the-Money Options
on Exercise Realized on December 31, 1997 on December 31, 1997
Name (#) $ (#) ($)
- ------------------------ ------------------ -------------- ------------------------ ----------------------
<S> <C> <C> <C> <C>
Michael Murry --- --- 1,500 $25,125
- ------------------------ ------------------ -------------- ------------------------ ----------------------
Robert Blonski 3,000 $80,250 --- ---
- ------------------------ ------------------ -------------- ------------------------ ----------------------
Conrad Kaminski 1,000 $15,980 2,000 $52,770
- ------------------------ ------------------ -------------- ------------------------ ----------------------
James Bomberg 2,000 $31,960 1,000 $26,660
- ------------------------ ------------------ -------------- ------------------------ ----------------------
</TABLE>
BENEFIT PLANS
Merchants maintains a 401k Profit Sharing Plan for the benefit of all employees
who have attained the age of 20-1/2 years and have completed six months of
service as of the 401k Profit Sharing Plan anniversary date, June 1st. A
participating employee may elect to defer a portion of his or her compensation
(between 1% and 12% of base compensation, subject to certain limitations, in 1%
increments) and contribute this amount to the 401k Profit Sharing Plan.
Deferrals of up to 6% of compensation which are contributed to a trust set up
pursuant to the 401k Profit Sharing Plan may be deducted by Merchants for
federal income tax purposes. Merchants may make either or both of the following
types of contributions out of its net profits to the 401k Profit Sharing Plan
(I) matching contributions up to 1% of base compensation; (ii) discretionary
contributions which are based on consolidated earnings of Merchants. Employees
of Merchants are fully vested in all amounts contributed to their account under
matching and discretionary contributions made by Merchants. Total contributions
amounted to $180,305 in 1997, contributions for Messrs. Murry, Blonski, Kaminski
and Bomberg (the persons listed in the Compensation Table) were $9,938, $5,017,
$5,346 and $5,206 respectively. With respect to the investment of individual
accounts, a participant may direct the Trustee in writing to invest the vested
portion of his/her account in specific assets, including Merchants' securities.
Merchants has established a Salary Continuation Plan to provide retirement
income for President James Bomberg, Chief Financial Officer James Mroczkowski
and Vice President Cynthia Loew. The Salary Continuation Plan is a non-qualified
executive benefit plan in which Merchants agrees to pay the executive additional
benefits at retirement in return for continued satisfactory performance. The
Merchants Continuation Agreement provides for annual retirement benefits of
$60,700 for Mr. Bomberg, $35,800 for Mr. Mroczkowski and $30,700 for Ms. Loew,
commencing at age 65 and continuing for a period of 15 years. The Salary
Continuation Plan is unfunded (no specific assets are set aside by Merchants in
connection with the Plan). If the covered executive leaves the bank's employ,
either voluntarily or involuntarily, the agreement under the Salary Continuation
Plan terminates and the executive receives no benefits unless obligations under
the Plan are assumed by a subsidiary of Merchants, because of the executive's
employment status with such subsidiary. The Salary Continuation Plan is
informally linked with a single premium universal life insurance policy. The
executive is the insured under the policy, but Merchants is the owner and
beneficiary of the policy. The executive has no claim on the insurance policy,
its cash value or the proceeds thereof.
17
<PAGE> 17
Franklin State Bank has adopted a Deferred Compensation Plan. Directors of
Franklin State Bank may elect to defer the directors' fees paid to them until
retirement with no income tax payable by the director until retirement benefits
are received. The deferral agreement provides for full vesting since the covered
director is setting aside his current compensation. Payments begin in the first
year following retirement.
PROPOSAL 2
PROPOSAL TO AMEND MERCHANTS' ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK.
DESCRIPTION OF AMENDMENT:
The Merchants' Board of Directors unanimously approved and recommended that
Merchants' shareholders approve an amendment to Article IV of the Articles which
will increase the number of authorized shares of Common Stock of Merchants from
1,500,000 shares to 3,000,000 shares. If the proposal is adopted by Merchants'
shareholders, it is expected that the amendment will become effective on May 26,
1998, or as soon as practicable thereafter. No holder of the Common Stock of
Merchants has any preemptive rights. The complete text of the amendment is
attached to this Proxy Statement as Exhibit A.
Under the current Articles, Merchants is authorized to issue up to 1,500,000
shares of Common Stock, par value $1.00. As of April 15, 1998, 1,360,948 shares
were outstanding. If the amendment is adopted, Merchants would be authorized to
issue up to 3,000,000 shares of Common Stock, par value $1.00.
REASONS FOR AND EFFECT OF AMENDMENT:
The Board of Directors believes that it is desirable to have additional
authorized shares of Common Stock available for stock dividends and splits (such
as the recent 50% stock dividend), possible acquisitions and other general
corporate purposes. While Merchants is engaged in an ongoing process of
evaluating potential acquisitions, Merchants is not involved in negotiating an
acquisition involving issuance of additional stock at the present time. While
Merchants cannot predict when and if stock dividends or stock splits or
acquisitions will occur, having the additional authorized shares available for
issuance in the future will provide greater flexibility and will avoid the delay
and expense of a special shareholders meeting, unless such meeting is required
by applicable law.
The increase in the number of authorized shares is not designed to deter or
prevent a change in control; however, under certain circumstances, Merchants
could use additional shares to avoid a takeover or change in control of
Merchants which the Board of Directors deems not to be in the best interest of
the Shareholders of Merchants. Merchants is not aware of any attempt to effect
such a takeover or change in control. As of this date there are no plans or
commitments with respect to the sale of additional shares of Common Stock of
Merchants.
The authorization of additional shares of Common Stock pursuant to this proposal
will have no dilutive effect upon proportionate voting power of present
shareholders of Merchants. However, to the extent that shares are subsequently
issued to persons other than present shareholders and/or in proportions other
than the proportion that presently exists, such issuance could have a dilutive
effect on present shareholders.
18
<PAGE> 18
If a quorum exists, the proposed amendment to the Articles of Incorporation is
approved if the votes cast favoring the amendment exceed the votes opposing the
amendment. A majority of the votes entitled to be cast on the amendment
constitutes a quorum. The Board of Directors recommends that the shareholders
vote FOR the amendment. Proxies solicited by the Board of Directors will be so
voted unless shareholders specify to the contrary in their proxies or abstain
from voting on this matter. The complete text of the proposed amendment is
attached to this proxy statement as Exhibit A.
PROPOSAL 3
PROPOSAL TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK TO BE RESERVED FOR ISSUANCE UNDER THE
INCENTIVE STOCK OPTION PLAN.
Merchants' 1996 Incentive Stock Option Plan was adopted by the shareholders at
the Annual Meeting in 1996. The purpose of the Plan is to advance the interest
of the shareholders of Merchants by providing opportunity for ownership of the
stock of Merchants to present and future officers and key employees of Merchants
and its subsidiaries. The Plan is intended to provide an incentive for maximum
effort in the successful operation of Merchants and its subsidiaries. The Board
of Directors also believes that the Plan will give Merchants an additional type
of incentive-based compensation to attract and retain experienced and able
employees.
A summary description of the Plan is contained herein under "Executive
Compensation - 1996 Incentive Stock Option Plan." The Summary is qualified in
its entirety by reference to the Plan, which may be reviewed upon request to the
Secretary of Merchants.
As adopted in 1996, a maximum of 13,500 shares (20,250 shares after adjustment
for the 50% stock dividend declared in 1998) were authorized for grant over the
ten (10) year period of the Plan.
Subject to approval of the shareholders, at the Annual Meeting, the Board of
Directors, on April 20, 1998 approved the increase of additional shares for
grant under the Plan. This increase will bring the total shares authorized for
grant to 60,000 shares. All other terms and conditions of the Plan will remain
in effect. No awards have been made of the additional shares.
The increase in the amount of shares of Common Stock reserved for issue upon the
exercise of options granted must be approved by the holders of a majority of the
issued and outstanding shares of Common Stock.
The Board of Directors recommends a vote FOR the approval of the resolution
amending the 1996 Incentive Stock Option Plan. Proxies solicited by the Board of
Directors will be so voted unless shareholders specify to the contrary in their
proxies or abstain from voting on this matter. The complete text of the
amendment is attached to this Proxy Statement as Exhibit B.
19
<PAGE> 19
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as Merchants' independent
auditors for the fiscal year ending December 31, 1998. Representatives of Ernst
& Young will be present at the Annual Meeting to make any statement they may
desire and to respond to questions from shareholders.
OTHER MATTERS
Although management is not aware of any other matters that may come before the
meeting, if any such matters should be presented, the persons named in the
accompanying proxy intend to vote such proxy in accordance with their best
judgment.
SHAREHOLDERS MAY OBTAIN A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AT NO COST BY WRITING TO THE
OFFICE OF THE SECRETARY, MERCHANTS AND MANUFACTURERS BANCORPORATION, INC., 14100
WEST NATIONAL AVENUE, P.O.BOX 511160, NEW BERLIN, WISCONSIN, 53151.
By Order of the Board of Directors,
Michael J. Murry
Chairman of the Board
April 30, 1998
20
<PAGE> 20
EXHIBIT A
RESOLVED, that the Articles of Incorporation of Merchants and
Manufacturers Bancorporation, Inc. be amended by striking out amended
Article IV, relating to Capital, reading as follows:
"The aggregate number of shares of stock which this Corporation
shall have authority to issue shall be one million five hundred
thousand (1,500,000) shares of Common Stock of the par value of
One Dollar ($1.00) per share."
and inserting in lieu thereof the following:
"The aggregate number of shares of stock which this Corporation
shall have authority to issue shall be three million (3,000,000)
shares of Common Stock of the par value of One Dollar ($1.00) per
share."
21
<PAGE> 21
EXHIBIT B
RESOLVED, that Subsection 5.1 of Section 5 of Merchants and Manufacturers
Bancorporation, Inc.'s 1996 Incentive Stock Option Plan shall be, and it
hereby is, amended by striking out the first sentence reading as follows:
"Subject to adjustment as provided in Section 5.3, the total number
of shares of stock with respect to which options may be granted
pursuant to the Plan shall be 13,500."
and inserting in lieu thereof the following:
"Subject to adjustment as provided in Section 5.3, the total number
of shares of stock with respect to which options may be granted
pursuant to the Plan shall be 60,000."
22
<PAGE> 22
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
14100 WEST NATIONAL AVENUE
NEW BERLIN, WISCONSIN
PROXY FOR ANNUAL MEETING
This Proxy is solicited by the Board of Directors of Merchants
and Manufacturers Bancorporation, Inc. ("Merchants") for the Annual Meeting
of shareholders on May 26, 1998.
The undersigned hereby constitutes and appoints David Kaczynski and James Sass,
and each of them, with full power to act alone and with power of substitution,
to be the true and lawful attorney and proxy of the undersigned to vote at the
Annual Meeting of Shareholders of Merchants, to be held at Alverno College, 3401
South 39th Street, Milwaukee, Wisconsin 53215 on May 26, 1998 at 4:00 p.m. (or
at any adjournment(s) thereof), the shares of stock which the undersigned would
be entitled to vote on the election of Directors, on the proposals to amend the
Articles of Incorporation and the Incentive Stock Option Plan and in their
discretion on such other business as may properly come before the meeting or
adjournment(s). The undersigned hereby revokes any proxy heretofore given and
ratifies all that said attorneys and proxies or their substitutes may do by
virtue hereof.
1. ELECTION OF DIRECTORS
To fix the number of Directors at nineteen, and to elect the six persons
listed below as Directors as discussed in the Proxy Statement dated May 1,
1998 attached hereto.
James Bomberg Michael J. Murry
Conrad Kaminski Nicholas Logarakis
Keith Winters Duane Cherek
[ ] Elect as Directors the six nominees listed above.
[ ] Withhold authority to vote for the six nominees listed above.
[ ] Withhold authority to vote for individual nominees (to
withhold authority to vote for any individual nominee, check
this box and draw a line through that nominee's name above).
2. ADOPTION OF RESOLUTION AMENDING THE CORPORATION'S ARTICLES OF
INCORPORATION
Adoption of the resolution amending the Corporation's Articles of
Incorporation to increase the number of authorized shares of $1.00 par
value common stock from 1,500,000 to 3,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
23
<PAGE> 23
3. ADOPTION OF RESOLUTION AMENDING THE CORPORATION'S INCENTIVE STOCK OPTION
PLAN
Adoption of the resolution amending the Corporation's 1996 Incentive Stock
Option Plan to increase the number of shares of the Corporation's common
stock, $1.00 par value, reserved for issue upon the exercise of options
granted, from 13,500 shares (20,250 shares adjusted for 50% stock
dividend) to 60,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board of Directors recommends a vote FOR the election of the six persons
listed above, and FOR adoption of Proposals 2 and 3, as described in the Proxy
Statement.
If any additional matters are properly presented, the persons named in the proxy
will have the discretion to vote in accordance with their own judgment in such
matters. This proxy is solicited on behalf of the Board of Directors and may be
revoked prior to its exercise by written notice to the Secretary of the
Corporation, or by submitting a later-dated proxy, or by attending the annual
meeting. This Proxy will be voted in accordance with instructions given by the
stockholder, but if no instructions are given, this Proxy will be voted to elect
the persons listed above and FOR adoption of the listed proposals.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
dated May 1, 1998, and the Proxy Statement enclosed herewith.
Dated , 1998
-----------------------
Number of Shares:
-------------
- ---------------------------------- ---------------------------------------
Signature of Stockholder Stockholder's Name (Please print)
- ---------------------------------- ---------------------------------------
Signature of Stockholder Stockholder's Name (Please print)
(Please sign your name exactly as it appears on the stock
certificate. In signing as Executor, Administrator, Personal
Representative, Guardian, Trustee, or Attorney, please add your title
as such. All joint owners should sign.)
24
